State considers an energy auction

Robert Miller

Updated 10:59 pm, Monday, March 18, 2013

"What do I hear for this old-fashioned, utility-dependent homeowner? What about the hundreds of thousands of his brothers and sisters in similar straits? I need a bid -- energy companies, what are they worth to you?"

That's the auction being envisioned in the state for the years ahead. The state wants to sell off the rights to more than 808,000 residential customers who have not signed up to buy energy from one of the independent suppliers selling electricity.

If the plan succeeds, the state's coffers could see as much as $80 million in new revenue.

Katz said her office has testified about the plan. She said her office wants to make sure all consumers have the right to opt out of any agreement and choose their own energy company -- including the two major utilities -- as they see fit.

"We're keeping a very close eye on it,'' Katz said.

Schain said the basic plan is to auction off blocs of residential customers who now get their energy from the two utilities -- Connecticut Light & Power Co. or United Illuminating -- to one of the energy suppliers. The winning bidders would then pay the state for the right to supply energy to that bloc of customers.

By doing so, Schain said Monday, the state would get more consumers involved in the energy marketplace. The more competition, the lower the prices people will pay for electricity and the lower their rates, he said.

And, Schain said, the proceeds from the auctions would go directly into the General Fund, providing new revenue.

One area leader, Ridgefield First Selectman Rudy Marconi, expressed some incredulity about the entire proceeding.

"What right does the state have to tell me who I have to buy my energy from?'' asked Marconi, who does buy his electricity from one of the alternative suppliers. "What if I want to buy it from CL&P? It seems to me there's something inherently distasteful about this.''

Roger Dietz, director of sales for Direct Power of Shelton -- one of the companies that may get involved in the bidding should it ever take place -- also asked how the system might work.

Dietz said any system like this would have to give people the flexibility to opt out of any arrangement they don't like.

"There's still a lot of work that will have to be done on this,'' Dietz said.

In testimony before the General Assembly on March 4, Jay Fletcher, director of regulatory policy for Northeast Utilities and CL&P, stopped short of opposing the idea but said the utility has "deep concerns that adequate consumer protections and choice options" remain in the legislation.

Schain, asked whether the state could legally hold such an auction, did not hesitate.

"Yes. It has been researched," he said.

Katz agreed that her office would not consider an auction illegal if it is sanctioned by legislation passed by the General Assembly.

The plans has its roots in the decision by the state to deregulate the state's energy markets in 2000.

Under the old system, the utilities produced energy, then shipped it along power lines to people's homes.

After deregulation, the utilities were only in business of transmitting energy. Other companies now make the power, or act as brokers, buying the electricity, then selling it to consumers.

When a consumer signs up with a different energy supplier, the utilities just accept that price. The monthly bills tell customers from whom they're buying electricity.

If consumers don't sign up with other companies, the utilities provide them with electricity set at a standard rate determined by the state Public Utilities Regulatory Authority, or PURA.

After more than 10 years, less than half the homes in the state have made the switch, even though doing so could save them money because many of the companies supplying electricity sell it at lower rates than the utilities. For a list of those companies, go to www.ctenergyinfo.com.

Schain said it's understandable, given the chaos of people's daily lives, that they've never switched.

"It may feel a little daunting," he said.

And, he said, people who grew up buying power from their utility may be happy doing that.

By now, many people who have made the switch have forgotten the details. Danbury Mayor Mark Boughton said earlier this month that he can't remember the exact name of the company that provides his home with electricity.